Power majors to meet Manmohan today

A high powered delegation comprising top corporate leaders of the power industry are meeting Prime Minister Manmohan Singh on Wednesday to discuss issues pertaining to shortage of coal and gas, issues arising out of coal imports becoming unviable, tariff hike and pending reforms in the power sector.

The delegation comprising corporate honchos like Ratan Tata, Anil Ambani, Prashant Ruia, L. Madhusudan Rao, Anil Aggarwal and Ashok Hinduja will apprise the Prime Minister of the problems they face and the need to unleash the next round of reforms to meet the growing energy needs and to keep pace with the 9 per cent GDP growth targeted in the 12th Five Year Plan.

Interestingly, a majority of the leaders are meeting on Tuesday night over dinner to chalk out a joint strategy in order to present a united case before the Prime Minister. Issues like delayed environmental clearances, cut in customs duty on imported coal, shortage of domestic coal and gas, and poor health of the distribution companies are likely to form the crux of the discussions.

The Planning Commission has already pitched for hike in tariffs to compensate the private power developers for increased cost of coal and other raw material warning that banks have already started showing their reluctance to finance power projects in view of the poor outlook due to various cost factors in the sector. Presently, the private power companies have a capacity of around 24,000 MW.

Meanwhile, the Confederation of Indian Industry (CII) said the power sector was faced with multidimensional challenges. These issues are constraining growth in the sector and could adversely impact economic growth in the long term. “Unless the issues plaguing the power sector are urgently addressed, the aspiration for 9 per cent growth in the 12th Plan may not be met,’’ CII director general Chandrajit Banerjee said in a statement in New Delhi.

He said critical issues including fuel supply bottlenecks, distribution losses and lack of funding need to be urgently addressed to achieve double digit GDP growth.

Fuel availability has emerged as the biggest risk faced by thermal power projects in India. Coal production has not kept pace with power capacity addition in the current Plan and developers have been forced to import coal at a time when international coal prices have shot up. Lack of clarity on financing this extra cost as well as added transport costs for plants in the interior have led to uncertainty and reduced investments in power, he said.